Returning to the Majority Rule: Liability Insurance Rights Can Follow the Liability

New York Law Journal

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PUBLISHED ON: December 14, 2015

Corporate deal lawyers had for many decades designed corporate acquisitions and divestitures on the long-held foundation that historical rights to insurance proceeds were freely assignable, and that the rights to the proceeds of liability insurance could freely follow the liabilities. The design of those deals was called into question in 2003 in Henkel Corp. v. Hartford Accident & Indemnity Co., 29 Cal. 4th 934 (Cal. 2003), which severely impeded companies involved in such transactions by enforcing consent-to-assign clauses even though policy periods had expired and the right to insurance already had accrued. In 2015, California reversed course and restored the ability of corporations to freely assign the rights available under insurance policies after a loss. Fluor Corp. v. Superior Court, 61 Cal. 4th 1175 (Cal. 2015).

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